Five things to watch in markets in the week ahead
The valuation of leading DIY website builder Wix (NASDAQ:WIX).com is down more than 40% this year. Usually, such big crashes are accompanied by a very good reason why. Not this time. Revenue is projected to grow by 12-14% in 2025, the company has a net cash position on its balance sheet and is rapidly growing its user base. In our opinion, WIX has been cut in half since January simply because it was time for an Elliott Wave correction.
According to the theory, a three-wave correction follows every impulse. The daily chart of WIX reveals that the 2025 selloff was preceded by a five-wave impulse pattern to the upside. We’ve labeled it 1-2-3-4-5 in wave (1), where wave 1 was a leading diagonal, while wave 4 was a triangle. The five sub-waves of all three motive waves are also visible.
The recent plunge then fits in the position of wave (2) and can best be labeled as a W-X-Y double zigzag. Wave Y has already dragged the stock to the 61.8% Fibonacci support area, where retracements often end. If this count is correct, a complete Elliott Wave cycle is now in place and it is time for WIX stock to head north again in wave (3). At just 11 times free cash flow, it surely looks like a bargain.
Not to mention that Squarespace (NYSE:SQSP), Wix’s main competitor in DIY websites, was taken private last year for $6.9B. Wix is now a $6.9B company, too, despite bringing in twice as much revenue. It looks like company fundamentals and valuation support the stock’s bullish Elliott Wave setup.